How Ace Hardware, America’s 100-year-old neighborhood hardware store, beat its big rivals

How Ace Hardware, America’s 100-year-old neighborhood hardware store, beat its big rivals

Mahin Barker said the soccer mom took care of him at her shop in West Lake Hills on the outskirts of Austin, Texas. They come almost every day and they are interested in shopping.

“They have a lot of time and disposable income to spend so we have to keep our stuff fresh because they are here so often,” he said.

The store he worked on was Ace Hardware.

The 100-year-old Oak Brook, Ill.-based hardware chain, which has branched out into smaller American neighborhoods with more than 5,000 locations, appears to be attracting shoppers even as its big-box hardware rivals Home Depot and Lowe’s are struggling to do so. same

One indicator is how often people go to Ace Hardware compared to its competitors.

Monthly customer traffic to Ace Hardware locations is up so far this year compared to a year ago, compared to mostly declining monthly shopper traffic to Home Depot and Lowe’s stores over the same period, according to Placer. ai, which uses location data from mobile devices to estimate visits to specific retailer locations.

Also, all three retailers reported their quarterly sales this month and it’s not a pretty picture for the industry Goliaths. Home Depot’s same-store sales (or sales at stores open at least a year) in the US fell 3.2% in the most recent quarter both as shoppers pulled back on renovations and remodeling and discretionary decor purchases to spruce up their homes. Home Depot’s stock price is down 5% so far in 2024.

Lowe’s sales at stores open at least a year fell a steep 4.1% in its most recent quarter for the same reason. Lowe’s stock price has declined 7% in the past month.

“The danger here is that while Home Depot is well-positioned, it faces more competition in the light-duty improvement space from smaller repair players, garden centers and specialists like Sherwin Williams in categories like paint,” Neil Saunders, retail analyst and director affairs at Globaldata Retail, wrote in a note last week.

“Consumers are now shopping around more to find the best deals and offers,” he said.

This trend seems to be working in Ace Hardware’s favor. The hardware chain saw a small increase in US same-store sales in its most recent quarter and a 1.1% increase in the average amount people spent per store trip. Total revenue for the entire company system increased 2.5% over the past year. It expects to open 200 new stores by 2024.

Small and large shops
Ace Hardware’s store setup — smaller stores averaging 7,000 to 10,000 square feet — located in communities and selling more than just nuts, bolts and paint resonates with the evolving shopping spirit of today’s fast-paced consumers, industry observers say. Each store carries approximately 25,000 to 30,000 unique products.

“It’s an interesting phenomenon,” said Michael Brown, a partner in the consumer products consulting firm Kearney’s retail practice.

“Ace is your local intimate hardware store that I can walk into, get something quickly, talk to people I know. It is also close to home and I can easily fulfill my small project needs,” he said.

Home Depot and Lowe’s, on the other hand, cater to contractors or homeowners doing major renovations. And while larger home improvement projects have slowed in recent months, the larger hardware stores have seen sales decline. Meanwhile, Ace is benefiting as people turn to smaller repair projects, he said.

“They are quite well positioned now geographically to meet the needs of today’s consumers,” he said. “They have built a unique niche and their stores also bring a local flavor to them.”

Barker is the owner and operator of five Breed & Co Ace Hardware locations in the Austin, Texas area. The West Lake Hills store, in particular, is popular with women.

While the store stocks the usual hardware essentials like screws, drill bits and hammers, Barker goes out of its way to offer the unexpected.

“I like to call it a boutique atmosphere,” he says. He said high-income customers expect better service. “If you want to continue to have consistent repeat business, you have to give them what they want.”

In addition to hardware and garden products, the homewares section offers wedding registries. “It’s a very unique proposition because we don’t have a lot of competition in terms of local, relevant and differentiated retail here,” Barker said.

The idea of registration arose from local needs. “We realize that many brides don’t necessarily want to get what Aunt May bought them,” she said. Engaged couples, he said, sometimes prefer things like grills or plants. So we’re really improving that part of the business to stay relevant to our customers.”

Jewelery is also a top seller, as are expensive Le Crueset pots and pans, Nest candles, baby products such as plush toys, baby onesie pajamas and chocolate truffles.

“We sell a ton of Le Crueset. It’s one of our best performances,” Barker said. “A lot of our customers are grandparents going to baby showers and they need gifts. We expect people to come in every day to buy gift items from us.”

This hybrid hardware-household-curio model sets Ace Hardware stores apart.

“Consumers are looking for new places to shop,” Brown said. “We’ve lost places like Bed Bath & Beyond and Linens ‘n Things, where you go to buy curtain rods or smaller home essentials. Ace fills that void well.”

Retail cooperative
Ace Hardware, with its catchy jingle “Ace is a place with helpful hardware people,” was founded in 1924 by a group of four Chicago hardware store owners. It operates a unique structure where only 4% of its more than 6,000 stores worldwide are company-owned.

The retailer, on the other hand, operates as a retail cooperative, which means the individual store operators are also part owners, making them independent entrepreneurs. “They’re essentially shareholders, they own the brand and the company,” said Kim Lefko, Ace Hardware’s chief marketing officer.

Individual store owners, who make up more than 90% of the business, select products in two ways: They can order and stock national brand and private label products in bulk at lower prices directly from Ace Hardware warehouses. They also have the flexibility to select about 20% of the merchandise mix to meet local tastes and needs by ordering directly from other vendors, Lefko said.

“During the post-World War I era, four business owners like today wanted to be competitive in the market. They got together and the first product they bought was a truckload of sponges so they could compete on price,” Lefko said. “This is really a cooperative structure. It makes us competitive against Home Depot and Lowe’s, along with the ability to tailor products to the needs of local communities.”

But all stores are still united under Ace’s national marketing and advertising efforts, he said. Ace also drives innovation with the brand. It has just launched its first Ace-branded food products, a range of BBQ sauces and Ace Hardware’s vintage-inspired clothing collection.

Legendary NFL coach and broadcaster John Madden served as a pitchman for Ace Hardware for more than 20 years while his NFL broadcasting partner Pat Summerall was a pitchman for rival hardware chain, True Value.

In many of the same neighborhoods, Ace Hardware has faced off against True Value, which has operated a similar model to Ace for years, a cooperative partly owned by its roughly 4,000 store owners. Private equity firm Acon Investments bought True Value in 2018 and ended its days as a cooperative retail chain.

Michael Wynn, owner of Sunshine Ace Hardware with 12 locations in the South Florida area, caters to a different demographic in his community — fishermen.

Among the locally sourced products he stocks next to plumbing, electrical and hardware are fishing gear — reels, rods, tackle and a Yeti cooler. “We have the largest variety in southwest Florida,” he said. “But we also sell homemade fudge and Vera Bradley bags and pouches.”

“People are starved for time. They want a quick and easy shopping experience and we try to give that to them,” said Wynn, whose grandfather founded the first Sunshine Ace in 1958. So he added a drive-thru window in one of his newer stores.

He’s glad he did. He said, a customer recently stopped by to take an order but his son was agitated and made it difficult for the man to enter the store.

“So he asked the store clerk to bring the order to him,” Wynn said. “This to me is a big part of why we try to offer a unique service and look at our customers.”

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